If you've come to Mongolia for a carpet, this might be the store you've been waiting for (although we stress 'might'). Most of the carpets aren't traditional, and some may seem garish (pixellated Mongol cavalry charge on a rug, anyone?), but there are some okay finds, and a nice selection of cashmere and silk products.
It's just off the main road to the train station, about 2km from the Friendship Monument.